Spotting red flags in hiring a contractor
Don’t pay cash without a firm contract
It’s important to know how to find the right contractor and to know the right questions you need to ask. But I’ve been getting questions about the kinds of answers you should be hearing, and the truth is, it depends on the job. That’s why the research you do before speaking to contractors is so important.
But there are definitely a few things you wouldn’t want to hear from any contractor that you’re thinking of hiring:
CASH JOBS
I know what you’re thinking: There’s nothing wrong with cash jobs if it can save you some money. But here’s the problem: You leave no paper trail, which puts you — not your contractor — in a vulnerable position. You are the one running the risk if something goes wrong, because there is no proof of the transaction or of the job even happening i f you’re only working with cash.
Cash jobs also t e nd t o mean t he contractor wouldn’t have take out a permit, which means no one will be inspecting the work — all bad news for you, the homeowner. It’s a really big risk, but not for the contractor.
BIG DEPOSIT OR RETAINER
Let me guess — they want money up f ront because they need it to purchase materials and product. Contractors who don’t have enough cash or extra stock to get jobs started (which really just means demolition in most cases) either aren’t doing many jobs or their business isn’t going well. Would you want a con- tractor like that? No. You want a professional who doesn’t need too much cash today to get tomorrow’s job started.
Ultimately, it depends on the job and what’s involved, but typically no contractor should ask for more than 10 per cent as a deposit or retainer. I’ve heard of some contractors asking for as much as 65 per cent up front. That’s a big, big red flag. And I know I’m going to get emails about this, but the truth is, there are some contractors out there who don’t even ask for a deposit on small jobs.
A deposit or retainer really only serves one purpose: it protects the contractor. They just want to know that you’re serious about the job and that you’re going to pay for the work they do. It’s a security measure; it shouldn’t be used as a payment.
HAVEN’T BEEN IN BUSINESS LONG
Whether these contractors are just starting out or have changed their business name, it’s not good news for you. Even if a contractor is j ust starting out, they should have references and a portfolio of finished jobs — whether it’s just a buddy’s basement, an in- law’s bathroom, cousin’s kitchen or a neighbour’s backyard. And they must have insurance.
They should have a list of jobs they’ve completed and of happy clients. You don’t want your reno to be their second, fourth or fifth. You want to know that they can do the job right, a million times, with their eyes closed, and that it lasts — and only time can tell you that.
NO CONTRACT
A contract is not a one-page, line- by- line list of materials and sub-trades. That’s an estimate. A contract should be several pages long and should contain every detail about the job, including start time and end time, what happens if there’s a change order; timing on when materials are coming in; and a payment schedule that’s tied to project milestones or stages — the most common are rough-in, drywall and completed.
The rough-in stage is when the electrical and plumbing have been installed but haven’t been connected to any fixtures. The drywall stage is when the drywall can go up and all mechanics are done. The last or completed stage is when about 90 per cent of the job is completed.
You hold onto the remaining 10 per cent of the contract price for 45 days as a holdback to make sure your specific contractor delivered on everything that was outlined in the contract, including paying sub- trades. The last thing you want is a lien on your property.
Bottom line: If a contractor has no experience, no references, no contract, no insurance, works with no permits and gives you no paper trail, it’s a no brainer: Move along.